Best Buy Says Web Lifted Holiday Sales

Best Buy Co.'s holiday sales in the U.S. grew 4.1% on sharply higher online sales, but the retailer warned that its earnings would begin to feel pressure starting next quarter as it boosts spending to fuel growth.

Shares of Best Buy fell 5.8% in premarket trading.

Best Buy has invested in its Web operations amid concerns that its stores were becoming little more than a testing ground for products that are ultimately bought online. The company has spruced up the look of its website, attracted more customer reviews, added a clearance section and improved its search-engine rankings.

In the nine weeks leading up to Jan. 3, comparable online sales in the U.S. grew 13.4% compared to a year earlier.

Best Buy's sales excluding newly opened or closed stores increased 2.6% in the U.S during the holiday period. Demand for TVs and mobile phones was offset by weakness in tablets.

As for the current year, Best Buy said industry changes--such as deflationary pricing, weak demand and declining purchases of extended warranties--are pressuring the company. In response, the company plans investments in growth initiatives that will pressure first-quarter results.

During the holidays, comparable sales of consumer electronics increased 11.1% in the U.S., while appliances sales jumped 9.9%. International sales, excluding newly opened or closed stores, fell 3.6% on a 13.4% decrease in entertainment sales.

Write to Chelsey Dulaney at [e-mail]

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